Siddique, R v

Afraz Siddique appeals, with the leave of the Full Court, a confiscation order under the Drug Trafficking Act, 1994, in the sum of £3,179,080.68, made on 24 February 2004 by HHJ Breen sitting in the Luton Crown Court. The appellant was given 12 months to pay; in default he would serve 71/2 years imprisonment.

The appellant was charged with an offence of conspiracy to supply a controlled drug of class A, heroin, with nine other alleged conspirators between January and 29 May 2002. On 15 November 2002 the appellant pleaded guilty. Sentencing was deferred until the conclusion of the trial of the other defendants. One of the defendants - Robiul Haque – pleaded guilty to the conspiracy and gave evidence in the trial of the eight others defendants which took place between 17 February and 19 March 2003. All the defendants, bar one, were convicted.

On 11 April 2003 the appellant was sentenced by HHJ Breen, the trial judge, to a term of 11 years imprisonment. The term of 71/2 years imprisonment imposed on the appellant in default of him paying the confiscation order was made consecutive to the term of 11 years. Thus, if the appellant fails to satisfy the confiscation order, the total length of this sentence of imprisonment will be one of 181/2 years.

The confiscation proceedings took place before HHJ Breen on 9 & 10 February 2004. The judge had of course heard the evidence given at trial. Additionally he had in front of him the statement under s.11 of the 1994 Act of D.C Smith, a police officer with the Financial Investigation Unit of the Bedfordshire police, the appellant’s response of 1 December 2003, D.C. Smith’s further statement of 19 December 2003, a note relating to the beneficial interest prepared by Mr Bennathan, counsel for the appellant, of 6 February 2004 and other documents referred to in the judgment.

D.C. Smith was not cross-examined. The appellant’s father provided a statement. Neither he, nor the appellant, nor any other members of the family were called to give evidence. The confiscation proceedings were thus conducted by way of submissions. The judge reserved judgment.

On 24 February 2004 the judge handed down his judgment. He made a number of findings, based on the evidence he had heard at the trial, as to the nature and extent of the drug dealing business run by the appellant. The salient facts found by him are as follows. The appellant’s business of Fast Tan Shop in Luton begun in May 2001 was run at a loss and was little more than a front for the drugs business which in the judge’s words “had begun to operate well before the turn of the year 2002”. The appellant was a regional distributor. He distributed heroin in bulk from suppliers in London and sold large quantities on to local distributors. The judge described how the appellant’s associates would go to London, obtain supplies, go to local hotels in Luton, cut up the heroin, and pass the packages on to local distributors. The amounts bought and sold on were substantial.

Furthermore, the evidence of D.C. Smith satisfied the judge that the appellant had begun dealing in drugs long before the setting up of the Fast Tan Shop in May 2001. He said at p.8: -

“The evidence of D.C. Smith satisfies me that the defendant has throughout the 6 year period enjoyed an income and lifestyle unsupportable on his known and substantiated legitimate resources”.

Later on the same page he said:-

“Indeed, the available evidence as to the defendant’s lifestyle, assets, and level of dealing satisfies me that it is more probable than not that the defendant had been dealing in drugs for a very considerable period prior to his arrest and very probably for more than six years”.

In our judgment the judge correctly directed himself as to the relevant provisions of the 1994 Act. First, he found, as was conceded by Mr Bennathan, that the appellant had benefited from drug trafficking. Second, he had to determine the extent of the appellant’s benefit from drug trafficking. The judge determined that the appellant’s benefit was £3,179,080.68. Third, the judge had to decide whether the amount that might be realised at the time of the confiscation order was less than the amount the judge had assessed the value of the appellant’s proceedings of drug taking [s.5(3)]. He decided that the amount that which might be realised was the same as the benefit.

The appellant now challenges the validity of the judge’s reasoning as to steps 2 and 3.

How then did the judge arrive at his conclusions? Benefit. The Crown’s case was that there were two methods by which the benefit to the appellant of his drug dealing could be properly calculated. The first was “expenditure plus deposits minus legitimate income” which resulted in the figure for benefit of £3,179,080.68. The second was an assessment of the value of the drugs passing through the appellant’s hands. The least value, it was contended was £2,300,000. The figure sought by the Crown under this method was £6,820,000.

Before the judge Mr Bennathan submitted that both methods were flawed. He submitted that the correct approach was for the judge to accept the evidence of Mr Haque as to the volume of the drugs with which the appellant dealt and then to assess the length of time that the appellant had been involved in dealing i.e about one year. The judge rejected that approach for a number of reasons. These included his rejection of Haque as a reliable witness. Further, the level of dealing during April and May 2002 was lower that the appellant was customarily transacting and was described by the appellant in an intercepted telephone call as a “famine”. Haque had given evidence that in a month during that period 21/2 kilograms were purchased in London and passed onto local distributors. Mr Bennathan did not pursue that ground before us. But, even taking that figure as typical of the extent of the appellant’s dealing (which the judge did not accept), the amount of benefit to the appellant of drug dealing over 6 years was £3,600,00 (i.e. 30 kilograms p.a. x £20,000 per kilo retail price x 6 years), had the price of heroin and his level of dealing remained constant throughout. Thus on the figures as put forward by Mr Bennathan for the 12 months immediately preceding May 2002 but taking a period of six years not 12 months, the benefit to the appellant would have been of the order of £3,600,000.

As to the second method put forward on behalf of the Crown we note that the judge did not find in its favour. Although the judge described the figure of £6,820,000 as “supportable”, nevertheless he said it was not only a “maximum” but also a “somewhat arbitrary maximum”. He went on to find that:-

“Doing the best I can in the circumstances (erring, if at all, I hope on the side of fairness to the defendant), and having regard to the statutory framework I am required to apply, I am satisfied on the evidence that the figure that most accurately reflects the defendant’s benefit from drug trafficking is £3,170,080.68 being the Crown’s figure based on expenditure plus deposits in bank statement etc., less legitimate expenditure. This figure also has the merit, so it seems to me, of being supported by the calculations based on the level of dealing during the months immediately preceding the defendant’s arrest”. (i.e, we interpolate, £3,600,000).

As to the first method, D.C. Smith estimated that the expenditure of the family supported by the appellant over the six years up to May 2002 was £2,716,522.97. Of that £2,300,000 was attributed to the purchase of heroin over six years. The appellant told D.C. Smith in interview that his profit was £2,000 per kilo. The judge found that far from overstating his profit per kilo he was likely to have understated it. D.C. Smith concluded that the purchase price of £20,000 per kilo would have bought 115 kilos of heroin i.e. a total cost of £2,800.000. There was an additional purchase of heroin costing £45,000. The balance was made up of living expenses, the purchase of two properties and the running expenses of Fast Tan Shop.

The figure for deposits of £682,630.93 was calculated from an examination of the bank accounts of the appellant in this country and Pakistan, of Mohammed Siddique (the appellant’s father) in this country and Pakistan, Ijaz Siddique (the appellant’s brother), Shaneez Siddique (the appellant’s sister), Shazad Siddique (the appellant’s brother), Maneez Siddique (the appellant’s sister) and Parveen Akhtar (the appellant’s sister). The amounts deposited in the UBL account in Pakistan in the name of the appellant and his father totalled £229,945.77. The father was on state benefits. Many of the deposits and withdrawals were in round figures. Activity in the accounts ceased after arrest. Ijaz Suddique was in receipt of jobseeker’s allowance from November 1998 to May 2002 almost continuously. He lived with the appellant. Shaneez too lived with the appellant. She was employed. There were round figures of deposits and withdrawals. There was no post arrest activity. Shazad lived with the appellant. He had no income. There were round figures of deposits and withdrawals. Maneez did not live with the appellant. But she had no source of income. Almost £66,000 worth of deposits were made. These were round figure withdrawal and deposits. Post arrest the bank accounts were inactive. Similar points can be made in relation to Parveen.

The legitimate income was calculated at £220,073,22. This included £15,822 rental income from 30 Moor St, £78,665.75 the proceeds of sale of Bishopscote Road and £45,037.84 income from the Fast Tan Shop.

Mr Bennathan submitted before us that the Crown’s case was flawed because it involved taking every pound of expenditure during the six year period and attributing it as a benefit obtained by the appellant from drug dealing. Mr Bennathan took us to a number of points in support of that submission which he set out at para 12 of the notice of appeal. In essence they are submissions that the extended family of the appellant dealt in cash, that the family owned property in Pakistan, that the family made informal loans to each other, that the Crown had failed to exclude the possibility of family earnings undiscovered by the police, and that there was a family home let to students. Thus it was wrong to attribute every pound of expenditure to the appellant.

It seems to us that the judge focussed on all these arguments and rightly rejected them. The judge (with whom we respectfully agree) said:-

“The legitimacy of the Crown’s approach to the assets of the defendant’s close family members depends on whether there is evidence to satisfy the court that moneys which found their way into the assets referred to, emanated from the defendant and thus that they were property held by him during the relevant period. The Crown cannot, and does not purport to, identify every item of expenditure funded by the defendant during the period in question, but seeks to make an estimate of that expenditure based on the information and evidence which came to light during the course of DC Smith’s investigation.

“The defendant is a member of a large extended family, 14 members of which, including the defendant, reside under the same roof, a property which has during recent years being extended and modernised from two semi-detached houses into an 8-bedroomed detached house.

“According to the inquiries made by DC Smith, none of those family members have sufficient means to have financed the necessary works at the property, to have met the expenditure and/or provided the monies deposited in the various accounts identified in Section 11 statement or to acquire 30 Moor Lane, Luton or 89 Bishoipsgate House, Luton, which were, to a greater or lesser extent, dependent on the defendant; that they had no legitimate income save for such as is identified in the Section 11 statement and the inference must accordingly be that the moneys which supported their lifestyle came from the defendant. If that is so, the statutory assumptions apply.

“In the light of the evidence as a whole including that relating to post arrest activity on the banks and the like, I am satisfied that it is more probable than not that the defendant was the source of the necessary funds and that those funds thus constitute property transferred to him during the relevant six year period and represent the proceeds of drug trafficking.

“In my judgment the statements prepared by DC Smith demonstrate that he has conducted a careful and painstaking inquiry into the defendant’s financial affairs and those of close family members and the conclusions he has drawn from those enquiries are logical and persuasive and, as he says, based of tried and tested methods of calculation. There is no evidence before me to suggest they are flawed”.

Realisable assets. The judge arrived at a figure identical to that for benefit, in the following manner. He looked at all the actual and realistic assets identified at pp 13,14 and 15 of his judgment. For some assets he concluded that the appellant was the true, sole beneficial owner. For others he concluded that he only had a defined share e.g. 184 Waller Avenue (1/2 share) and two plots of land (1/3 share). Those realisable assets totalled £549,525.61. He then said:-

“Hidden Assets. I am satisfied on the evidence that there are substantial hidden assets in Pakistan and I have no reason to suppose that the value of those assets is any less than the difference between the defendant’s benefit from drug trafficking and the established assets available for confiscation. Further, there is no evidence from the defence to displace the requirement in Section 5-(1) of the Act that “the amount to be recovered in the defendant’s case under the confiscation order shall be the amount the Crown Court assesses to be the value of the defendant’s proceeds of drug trafficking” namely £3,179,080.68.

“It follows that I assess the value of the hidden assets at a figure of at least £2,629,556.07, being the difference between the defendant’s benefit and the amounts specified above as the values of the identified realisable assets vis £549,524.61.

“In summary therefore, my findings are as follows:

The benefit figure is £3,179,080.68

The amount that may be realised is £3,179,080.68”

Mr Bennathan has submitted judge’s ruling was flawed and unjust. In deciding whether the “realisable” amount is less than the “benefit” the court must consider all the implications of the case not withstanding that the burden is on the appellant. Mr Bennathan submitted that the very route that the judge took to reach the figure of £3,179,080.68 involved accepting the Crown’s evidence that c. 80% of that figure i.e. £2,731,901 was expenditure and thus not available as resources of the appellant to discharge any confiscation order. Accordingly the assessment of realisable assets as equal to the benefit was such as to create injustice, and more so when the sentence of 71/2 years imprisonment in default is taken into account.

He referred to us to two authorities namely Benjafield [2001] 2 Cr. App.R. (S) 47 in the Court of Appeal, Criminal Division and [2002] 2 W.L.R. 235 in the House of Lords, and R v Barnham [2005] EWCA Crim 1049. In Benjafield Lord Woolf C.J giving the judgment of the court, considered the compatibility of the 1994 Act with Article 6 of the European Convention on Human Rights and in particular the burden placed upon a defendant under Section 5. At paras 98 to 101 he said:-

“Compatibility With Article 6

98.

Under both the 1988 and the 1994 Acts, the confiscation proceedings

include an express reversal of the onus of proof. In both cases, if the court makes the statutory assumptions, the process will involve a burden being imposed upon a defendant which, if he does not rebut it, will mean he will be at risk of having a confiscation order made against him. It is therefore necessary to consider whether, not withstanding this, the statutory confiscation processes are capable of complying with Article 6, and if so, whether in any particular case the manner in which the statutory provisions have been applied complies with Article 6.

“99.

When considering the first question, it is appropriate to show a degree of deference to the policy which the legislature considered was in the public interest. This is made clear by the Privy Council in Brown. Lord Steyn’s opinion refers both to the speech of Lord Hope of Craighead in R. v. Director of Public Prosecutions, ex p. Kebilene [1999] 3 W.L.R 972 and Lester & Pannick, Human Rights Law and Practice (1999), p. 74. It is incontrovertible that both Acts deal with a serious social problem which should be addressed. It is also clear that while in the majority of situations, it will be difficult for the prosecution to establish that any particular assets of a defendant were the proceeds of crime or drug trafficking, it will be far easier for a defendant, in the majority of circumstances, to establish, on the balance of probabilities, that the assets in dispute have an innocent source. After all, usually a defendant will know what the origin of his assets is. He will also be likely to be aware of his financial obligations which have to be set against his assets

“100.

The onus which is placed upon the defendant is not an evidential one but a persuasive one, so that the defendant will be required to discharge the burden of proof. (See Lord Hope’s third category of provisions in Kebilene (at p.992).) This is therefore a situation where it is necessary to carefully consider whether the public interest in being able to confiscate the ill-gotten gains of criminals justifies the interference with the normal presumption of innocence. While the extent of the interference is substantial, Parliament has clearly made efforts to balance the interest of the defendant against that of the public in the following respects:

(a)

It is only after the necessary convictions that any question of confiscation arises. This is of significance, because the trial which results in the conviction or convictions will be one where the usual burden and standard of proof rests upon the prosecution. In addition, a defendant who is convicted of the necessary offence or offences can be taken to be aware that if he committed the offences of which he has been convicted, he would not only be liable to imprisonment or another sentence, but he would also be liable to confiscation proceedings.

(b)

The prosecution has the responsibility for initiating the confiscation proceedings unless the court regards them as inappropriate. In both cases there is a discretion to be exercised and the manner in which the discretion is exercised is capable of being reviewed by this court.

(c)

There is also the responsibility placed upon the court not to make a confiscation order when there is a serious risk of injustice. As already indicated, this will involve the court, before it makes a confiscation order standing back and deciding whether there is a risk of injustice. If the court decides there is, then the confiscation order will not be made.

(d)

There is the role of this court on appeal to ensure there is no unfairness.

“101.

It is very much a matter of personal judgement as to whether a proper balance has been struck between the conflicting interests. Into the balance there must be placed the interests of the defendant as against the interests of the public, that those who have offended should not profit from their offending and should not use their criminal conduct to fund further offending. However, in our judgment, if the discretions which are given to the prosecution and the court are properly exercised, the solution which Parliament has adopted is a reasonable and proportionate response to a substantial public interest, and therefore justifiable”.

Mr Bennathan relies in particular on paragraphs 100 (c) and paragraph 101.

Lord Steyn, in his speech in the House of Lords, approved the whole of the passage which we have quoted in paragraph 20 above at page 245 E where he said:-

“For my part I think that this reasoning is correct, notably in explaining the role of the court in standing back and deciding whether there is or might be a risk of serious or real injustice and, if there is, or might be, in emphasising that a confiscation order ought not be made. The Crown accepted that this is how the Court, seized with a question of confiscation, should approach its task. In my view the concession was rightly made.”

So Mr Bennathan submitted that the Court should adopt a common sense view by not taking into account money already spent in the quantification of expenditure. The Court should restrict itself to the actual and identifiable realisable assets.

Mr Trimmer, for the Crown, contended that at the stage of the court assessing “realisable assets” the Crown is not under any obligation to provide a prima facia case. The burden shifts to a defendant to establish, if he can, the realisable assets to the satisfaction of the Court. He has the opportunity to adduce oral and/or documentary evidence from himself and/or relevant witnesses. The appellant did not avail himself of the opportunity to give evidence or to call evidence on his behalf, particularly from members of his family. He had the opportunity to call evidence to displace any inference that his realisable assets were not less than the benefit, which he did not take. How then, asked Mr Trimmer rhetorically, can this appellant complain of a serious injustice if he did not give or call evidence that his realisable assets were less than the benefit ?

Mr Trimmer drew our attention to paras 39, 40 and 41 in the judgement of the Court of Appeal in Barnham where Gage LJ said:-

“39.

We reject the submission that the prosecution was required to do anything further at the second stage of the proceeding by way of providing a prima facia case for the appellant to meet.

“40.

In our judgment the correct approach for the court to take when dealing with confiscation proceedings at the second stage is the same whether the benefit has been proved by evidence in addition to the statutory assumptions. Once the prosecution has established the benefit there is no requirement on it to provide a prima facia case. At the second stage the burden of proof shifts to a defendant to establish, if he can, his realisable assets to the satisfaction of the court. By the second stage a defendant will know exactly how the court has determined benefit attributable to him and must prove by evidence what his realisable assets are. It is for him to show why the confiscation order should not be “the value of (his) proceeds of drug trafficking”. If he proves that he has no, or appreciably less, realisable assets than the amount of the benefit determined by the court the order will be made in the lesser sum. Provided the judge keeps well in mind the principle that the risk of serious injustice to the defendant must be avoided and doses not just pay lip service to that principle the order will be in the amount assessed as either the amount of benefit or such other sum as the defendant shows represents his realisable assets.

“41.

To hold that the prosecution must, in some way, show a prima facia case that the defendant has hidden assets in our judgment would defeat the object of the legislation. It is designed to enable the court to confiscate a criminal’s ill-gotten gains. The expression “hidden assets” is indicative of the fact that the prosecution can have no means of knowing how and where a defendant may have dealt with or disposed of the proceeds of his criminal activities”.

Mr Bennathan submitted that this was not a case that where the court could take comfort from the fact that the judge had heard all the evidence since the appellant pleaded guilty and thus gave no evidence at the trial. Furthermore, he could not be called to give evidence in the confiscation proceedings because his credibility had been so badly damaged the judge would be very unlikely to accept any assertions made by him not supported by other material. (see para 2 of the appellant’s response to the Crown’s DTA statement).

In so far as these submissions sought to answer Mr Trimmer’s submissions, we reject them. The appellant had the opportunity of seeking to persuade the court about his realisable assets. He declined to take it, for no doubt the very good reason that either there was no, or no credible, evidence he could give and/or he would be exposed to penetrating cross-examination which could only make his position worse. The fact that his credibility may already have been badly damaged is not a shield behind which he can hide. If it were, defendants in the position of the appellant, could refuse to give evidence and yet successfully maintain that their realisable assets were less than the benefit. Such a position would be nonsensical, given the structure of the DTA and its compliance with Article 6, and would places judges hearing confiscation proceedings in an impossible position.

Mr Bennathan in support of his submissions set out at paras 19 and 23 above, relied on para 45 of Barnham from which it appears that the judge in that case had double-counted £65,000 which had been used to refurbish the appellant’s house, which inevitably must have been included in the value of the house. The Court of Appeal accepted that submission and deducted it from the figure of realisable assets found by the judge. Mr Bennnathan therefore submits that the figure of £2.3m should likewise be deducted.

We disagree. We accept Mr Trimmer’s submission that the appellant’s drug dealing over 6 years was by definition a continuing enterprise, involving purchase of heroin, sale at a profit and reinvesting some or all of the proceeds in fresh purchases and siphoning off the profits. Although it would be appear the appellant spent £2.3m on drugs, nevertheless the judge was entitled to look to the appellant to explain what had become of the drugs and/or their market value and how much his investment in them he had realised. But, as we have said, the judge received no evidence from or on behalf of the appellant. The comparison with para 45 of Barnham is fallacious. There the gross value of the house was known. In the instant case the appellant declined to explain to the court the matters we have set out above.

We are satisfied that the judge conducted a very thorough and careful inquiry. He was alive to the risk of injustice to the appellant (see in particular para B.1.3). He was entitled, in the circumstances of this case, to conclude that the appellant had not satisfied him that his realisable assets were less than the benefit.

We, however, do consider that the term of 71/2 years in default is too harsh, bearing in mind the principle of totality. Accordingly we reduce it to one of 5 years imprisonment. To that extent the appeal is allowed.